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Tax law newsletter - July 2015: Administrative instructions

Binding Information concerning Case no. 8250, of 30 June 2015, published on 14 July 2015

Right to deduction – Part of Property, granted by a third party, allocated to the business operations of the taxable person

Clarifies that, if the registered office of a company is the same as the residence of the company partner, Value Added Tax (“VAT”) on repairs to the property can only be fully deducted if the area occupied by the company’s head office is a space clearly delimited from the remainder of the property and the bills for repairs specifically identify that they refer to that delimited space.

Otherwise, it will be necessary to define a criterion for charging VAT on the cost of the repairs related to the part of the property allocated to company business. It will thus be permitted to deduct VAT paid in a percentage corresponding to the percentage of th e area of the property intended for company business.

Tax and Customs Authority

Tax Management Area - VAT

Circular no. 30172, of 1 July 2015

Clarifies that the VAT exemption envisaged with regard to the provision of food and transport services related to education, when carried out by establishments that are part of the National Education System or recognised as having similar purposes, applies to meal and transport services provided by the State, through the Ministry of Education or Municipalities, but is not applicable to meal preparation/supply and transport services that third parties provide to the Ministry of Education or to Municipalities.

Clarifies that a person subject to VAT who uses a leisure vehicle in the pursuit of his or her taxable activities may deduct VAT on the acquisition of an electric vehicle that complies with the requirements provided for by law. However, the maintenance and repair costs of that vehicle, as well as electricity expenses associated with its use, are excluded from the right of deduction if the electric vehicle in question is a “leisure vehicle” for the purposes of the VAT Code.

Tax and Customs Authority

Office of the Subdirector-General of Income Taxes and International Relations Circular no. 20.179, of 10 July 2015

Discloses recurrent questions in respect of IRS deductions (applicable to tax returns to be submitted in 2016) and their answers, following the amendments made by Law No. 67/2015, of 6 July, to the CIRS on deduction of health expenses and of preschool expenses.

Tax and Customs Authority

Office of the Deputy Director-General Circular no. 90022, of 17 July 2015

Discloses the codes relating to income subject to withholding of tax and acts subject to Stamp Duty to be used in the official form allowing identifying the nature of the income, of mandatory use from 1 July 2015 onwards.

Tax and Customs Authority

Office of the Subdirectorate-General of the Area of Taxes on Assets Circular no. 40108, of 21 July 2015

Clarifies that the application for exemption from Municipal Property Tax applicable to properties exclusively allocated to the supply of water to the public, to the treatment of urban waste water and municipal waste management systems, must be accompanied by a certificate issued by the Municipality attesting that the properties for which the exemption is requested are allocated exclusively to these activities.

It also clarifies that, if the deadline of 60 days for submission of the request is complied with, counted from 1 January 2015, with regard to properties allocated to these purposes prior to that date, or from the date on which they were allocated, if after 1 January 2015, the exemption applies in 2015 or in the year in which the allocation occurred, respectively. In other cases, the exemption will only apply in the year after that in which the request was submitted.

Tax and Customs Authority

Office of the Subdirectorate-General of the Area of Taxes on Assets Circular no. 40109, of 21 July 2015

Clarifies that the property tax exemptions provided for in Articles 45. 1, and 71. 7, of the EBF, applicable to properties submitted for urban rehabilitation – the first applicable for three years from the issuance of the renovation licence and the second for five years from completion of the rehabilitation –, are not cumulative and the taxpayer must opt for that which is most favourable.

It also clarifies that these exemptions are objective, being therefore irrelevant any change in the ownership of the properties.

Tax and Customs Authority

Office of the Subdirectorate-General of the Area of Taxes on Assets Circular no. 40110, of 21 July 2015

Clarifies the procedures to be followed by Municipalities and taxpayers that meet the requirements for application of the reduction in Municipal Property Tax provided for in Article 112. 13, of the Property Tax Code, applicable to properties intended for own permanent residence coincident with tax domicile of their owner based on the number of dependants members of the household.

Tax and Customs Authority Office of the General Director

Circular letter no. 8/2015, of 27 July 2015

Clarifies the treatment under Customs Law to export operations, including the definition of the economic operator who is deemed to be the exporter, on the VAT treatment of supply of goods aimed to export, as well as on the supporting documents required to the application of the VAT exemption in exports.

Tax and Customs Authority

Office of the Subdirectorate-General of the Area of Taxes on Assets Circular no. 40111, of 30 July 2015

Clarifies that under lease agreements of the common parts of a building subject to horizontal property, the form model 2, through which the lease agreement is communicated to the Tax Authorities, must be submitted by the administrator, on behalf of the condominium, whose tax identification number must be indicated as lessor.

It also clarifies that, in order to comply with that obligation, the condominium administrator must previously register as such in a Tax Authorities Local Service.

Tax and Customs Authority

Office of the Subdirectorate-General of the Area of Taxes on Assets Circular no. 40112, of 30 July 2015

Clarifies that under a lease agreement of a property included in an undivided inheritance, the form model 2, through which the agreement is communicated to the Tax Authorities, must be submitted by the representatives of the beneficiaries, on behalf of the undivided inheritance.

In this situation, the heirs should not be reported as lessors, being such capacity limited to the inheritance.

At last, it clarifies that, if the representative of the undivided inheritance is 65 years old (or more), the obligation to communicate the lease agreement, its amendments and cessation can be made personally in any Tax Authorities Local Service (not being mandatory to submit it electronically).

Tax and Customs Authority

Secretary of State for Tax Affairs

Decree no. 272/2015.XIX, of 30 July 2015

Postponing until the 30th November 2015 of the deadline established in the Regime of Communication of Financial Information for the communication by the financial institutions to the Tax Authorities of the data and information mentioned in Artic le 7 of that regime regarding each of “the USA bank accounts subject to communication” (FATCA).

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